Intel shares soar amid report of possible US government stake

After a report started making rounds that the U.S. government may buy a stake in Intel, the US chipmaker’s shares rose nearly 4% on Friday. This comes following a meeting between CEO Lip-Bu Tan and President Donald Trump after the latter demanded the new Intel chief's resignation over his "highly conflicted" ties to Chinese firms. Trump called the meeting "very interesting," while taking an unprecedented approach to corporate interventions.

In a way, Federal backing could give Intel more time to revive its loss-making foundry business, but according to analysts, it still faces a weak product roadmap and trouble attracting customers for new factories.

This latest move also signals Trump's administration considering using funds from the 2022 CHIPS Act, signed into law by his predecessor Joe Biden, to take a stake in Intel.

It could be a "game-changer", according to Matt Britzman, senior equity analyst at Hargreaves Lansdown. But he warned "government support might help shore up confidence, but it doesn't fix the underlying competitiveness gap in advanced nodes."

Intel lost its competitive edge years ago to Taiwan's TSMC and has virtually no presence in the booming AI chips market dominated by Nvidia. It is also fast losing market share in PCs and datacenters to AMD.

Intel’s latest 18A manufacturing process is facing quality issues, Reuters has earlier reported, as only a small share of chips produced are good enough for customers, while it remains partly dependent on TSMC to make Intel in-house designed chips.